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Informist, Thursday, Apr. 9, 2026

 

By Nandini Sinha and Meera Nair

 

MUMBAI – Corporate bond yields fell Thursday as mutual funds actively bought bonds with pressure from redemptions off and liquidity in the banking system in surplus, dealers said. Bonds maturing in up to five years were traded the most. The 10-year segment may take a while to see a rise in trade due to uncertainty over the situation in west Asia, dealers said. A few market participants remained cautious and limited their trades due to the uncertainty surrounding the ceasefire between the US and Iran, they said. 

 

With the net liquidity absorbed by the Reserve Bank of India at INR 4.57 trillion Wednesday, the surplus liquidity in the banking system touched its highest level in nearly four years. 

 

Mutual funds were major buyers in the corporate debt market, while private-sector banks mostly sold bonds. A handful of mutual funds also sold bonds based on their requirements. "(Most) mutual funds are getting funds to deploy, they were the highest buyers," a dealer at a state-owned bank said.

 

Indicative yields on three-year, five-year, and 10-year bonds of the National Bank for Agriculture and Rural Development fell 5 basis points Thursday. Yields on the three-year bonds fell to 7.40-7.45% from 7.45-7.50% Wednesday. Those on five-year NABARD bonds fell to 7.50-7.55% from 7.55-7.60%. Yields on 10-year NABARD bonds fell to 7.60-7.65% from 7.65-7.70% Wednesday.

 

Deals aggregating to INR 225.71 billion were recorded in the secondary market Thursday on the National Stock Exchange and BSE combined, up significantly from INR 166.26 billion Wednesday. Trading volume picked up as traders actively traded paper in the shorter-maturity segment. They attributed the rise in volumes to improved investor appetite. "Fundamentals have not changed, but inflation is higher than last year. It's just that the worst is over," a dealer from another state-owned bank said.

 

Paper issued by NABARD, Small Industries Development Bank of India, IIFL Finance Ltd., Capri Global Capital Ltd., Housing and Urban Development Corp. Ltd., Kerala Infrastructure Investment Fund Board, and Hyderabad Metropolitan Development Authority were traded the most.

 

No corporate bond issuance was placed in the primary market Thursday, dealers said. "Once the market gets normalised (less volatile), they (companies) will issue bonds," the first dealer said. Companies are expected to issue commercial paper and certificates of deposits to meet their funding needs by the end of April as concerns around the war in West Asia persist, dealers said. 

Companies, including public-sector undertakings, are expected to tap the primary market from the third week of April. "Usually, in the first two weeks of April, the whole industry (issuance by state-owned and private-sector companies) is dull," the dealer said about bond issuances. A dealer from a private-sector bank was of the view that issuances would pick up once the government starts its capital expenditure cycle, including announcing infrastructure projects.

 

UDAY BONDS

In the secondary market, one Ujwal DISCOM Assurance Yojana bond worth INR 10.50 million was traded Thursday, according to data on the RBI's Negotiated Dealing System-Order Matching System.

 

* INR 10.50 million of Andhra Pradesh's 7.35%, 2030 bond was dealt at 7.2965%

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

 

Tenure	Thursday	Wednesday
Three-year	7.40-7.45%	7.45-7.50%
Five-year	7.50-7.55%	7.55-7.60%
10-year	7.60-7.65%	7.65-7.70%

 

End

 

Edited by Rajeev Pai

 

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